American Express’s card rules for merchants prompted debate at the Supreme Court Monday, as the justices considered whether to revive a government antitrust lawsuit challenging the company’s approach, reported The Wall Street Journal.
As reported by Competition Policy International on Monday (Feb. 26), the case centers on the fees credit-card companies charge to retailers for processing transactions. American Express’s “anti-steering” provisions bar retailers from doing anything like offering discounts to encourage the use of competing cards that are less expensive. As a result, the government says, stores are stuck with higher fees, which are passed on to consumers — even those that don’t use American Express cards.
Supreme Court justices appeared divided over whether rules American Express imposes on merchants violate antitrust laws. During an hour-long oral argument, Justices Sonia Sotomayor and Neil Gorsuch dominated questions from the bench and offered different views of the case.
Justices Sonia Sotomayor and Elena Kagan signaled at arguments that they back the government’s claim that the company’s rules harm competition by preventing retailers from encouraging customers to use lower-cost cards, reported Bloomberg. Merchants can’t offer consumers a choice between earning a discount by using another card or sticking with an American Express card so they can earn rewards, Sotomayor said.
Justice Gorsuch, for his part, pressed an attorney for Ohio, one of 11 states that brought the challenge to the AmEx rules to the high court. He suggested AmEx, which has a smaller market share than Visa and Mastercard, doesn’t have the market power necessary to impose anticompetitive terms. He also said AmEx card rewards provided notable benefits to consumers.
The outcome of the case wasn’t clear because a majority of justices didn’t signal their views and both sides received tough questions from the court, concluded The Wall Street Journal.
And as PYMNTS reported late last month, should the Supremes rule against Amex, it could shake businesses as far-flung as Simon Malls to Airbnb. Those firms have business models that have been built on consumers getting access to their platforms, even as other entities are willing to pay fees to those platforms for access to those very same consumers.